Cash Is King as Bidding Wars Continue

A recent survey of Zillow Premier Agent partners examined the strategies that are working in today's home sales market to score a home, and what buyers should be prepared for as fierce bidding wars are waged nationwide. Agents throughout the past six months submitted nearly four offers per client on average before one was accepted, with 13% saying it took six or more offers on average.

Agents are using a variety of tactics to help their offers stand out, with at least half of listing agents surveyed encountering an all-cash offer, an escalation clause, submission before the offer review date, a higher down payment, or more earnest money when reviewing offers.

And with mortgage rates hovering below the 3% mark, the market is not showing any signs of slowdown.

Out of these strategies, agents found the most effective tactic was an all-cash offer, with nearly four in five agents (77%) submitting an all-cash offer on behalf of their clients, and 41% of listing agents noting that an all-cash offer was the most effective strategy in their recent transactions.

In addition to all-cash offers, agents are using an assortment of strategies. Nearly 21% of buyers' agents offered a higher down payment or more earnest money to get their client's offer to stand out, and approximately 25% always submitted before the review date. More unconventional strategies that agents are using include offering leaseback, throwing a pizza party, and sending flowers to the sellers.

Not only has social distancing, in light of the pandemic, fostered the proliferation of virtual home tours, tech-savvy agents say 31% of clients tour a home virtually before visiting the property in-person.

"Being able to tour a home virtually is a big timesaver for buyers," said Josephine Sabatino, Broker Manager at RE/MAX Edge in New York City. "3D tours provide buyers a clear, detailed view of the home and they can decide if it's right for them. This saves buyers from going to see a bunch of homes that just don't work, and help narrow down their choices early."

Waiving contingencies is another common tactic, and can be frustrating to home shoppers who lose bids to buyers using this strategy. In their last three to five transactions, at least half of the listing agents surveyed encountered waived inspections or financing. However, waiving contingencies can pose a huge risk to buyers in the short and long run.

According to the survey, waiving an inspection puts buyers at risk of unknown structural, mechanical or safety defects which can be incredibly costly to the buyer. If a buyer waives financing and their loan is not approved or the home doesn't appraise at the offer price, it's the buyer's responsibility to make up the difference in cash or walk away from their earnest money deposit–both potentially costly consequences.